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The Danish Competition Council blocks merger in building materials

14. May 2008

The Danish Competition Council has decided to block the proposed merger between J.F. Lemvig-Müller Holding A/S and Brdr. A & O Johansen A/S. Both companies are inter alia active on the wholesale market for plumbing and heating materials and on the wholesale market for electricity materials to professional customers, i.e. to plumbers and electricians.

”The decision to block the merger is based on extensive analyses of the competitive environment and of the market structures on the relevant markets. The remedies proposed by the parties would not address the competition concerns raised by the merger. As a consequence, a prohibition was the only option to avoid a restriction of competition on the relevant markets”, explains the Director General of the Danish Competition Authority, Agnete Gersing.

In its assessment, the Competition Council found that the merger would impede competition significantly on both markets due to increased risk of coordinated effects. The merger would have reduced the number of nation-wide wholesalers in plumbing and heating materials from 4 to 3 with a combined market share above 80 per cent. And the 3 wholesalers in electricity materials with a nation-wide network of outlets would have been reduced to 2 with a combined market share that would have been even higher.

The Council assessed that the merger increased the likelihood that the few remaining companies with significant market strength would raise prices and compete less vigorously for the customers on both markets.

In merger cases, the Danish Competition Authority always examines whether a solution can be found which would allow the parties to go ahead with the merger, for instance binding commitments proposed by the parties. The commitments proposed by the parties in this case would, however, not address the competition problems raised by the merger. It is the first time since the introduction of merger control in Denmark in 2000 that the Competition Council blocks a merger.

For further information please contact Director General Agnete Gersing (+45 72 26 80 01) or head of division Benedikte Havskov Hansen (+45 72 26 80 35).

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